First quarter 2018 net income and diluted earnings per share of $50.0
million and $1.18 represented increases of 40% and 39%, respectively,
compared to the first quarter of 2017. Adjusted diluted earnings per
share were $1.41, a 53% increase over the first quarter of 2017.
Adjusted EBITDA increased 34% over the first quarter of 2017 to $83.8
million.

“We are pleased to report these outstanding record results reflecting
our dynamic business model and strong execution all across the company,”
said Paul J. Sarvadi, Insperity chairman and chief executive officer.
“Our key drivers to growth and profitability are in place setting up a
fourth consecutive year of impressive earnings growth for 2018.”

Revenues increased 15% over the first quarter of 2017 to $1.0 billion on
a 12% increase in the average number of worksite employees paid per
month. The continued double-digit worksite employee growth was the
result of strong new client sales driven by an increase in the number of
trained Business Performance Advisors, a continuing high level of client
retention, and an improvement in the net hiring of worksite employees by
our client base. Worksite employees paid from new sales increased 23%
over the first quarter of 2017 on a 15% increase in the average number
of trained Business Performance Advisors. Client attrition totaled only
8% during the heavy first quarter client renewal period, an improvement
over the first quarter of 2017.

Gross profit for the first quarter of 2018 increased 25% over the first
quarter of 2017 to $199.7 million. This increase was driven by the 12%
worksite employee growth, lower cost trends in our benefits and workers’
compensation programs and solid pricing. Operating expenses increased
28% over the first quarter of 2017 to $135.0 million, including one-time
bonuses related to tax reform and additional accruals for incentive
compensation tied to our outperformance during the quarter.

Net income and adjusted EBITDA per worksite employee per month increased
25% and 19%, respectively, over the first quarter of 2017 to $85 and
$143, respectively.

The first quarter 2018 effective income tax rate of 23% was impacted by
the enactment of tax reform in late 2017 and the benefit associated with
the vesting of long-term incentive plan shares during the quarter.

“Our double-digit worksite employee growth, combined with the effective
management of pricing and direct cost programs, continued to produce
adjusted EBITDA at record levels,” said Douglas S. Sharp, senior vice
president of finance, chief financial officer and treasurer. “This
strong cash flow positions us to continue to invest in the growth of our
business while also providing excellent shareholder returns.”

2018 Guidance

The company also announced its updated guidance for 2018, including the
second quarter of 2018. Please refer to the accompanying financial
tables at the end of this press release for the reconciliation of
non-GAAP financial measures to the comparable GAAP financial measures.

Q2 2018

Full Year 2018

Average WSEEs

202,000

—

203,700

206,400

—

208,400

Year-over-year increase

12%

—

13%

13%

—

14%

Adjusted EPS

$0.59

—

$0.63

$3.36

—

$3.44

Year-over-year increase

44%

—

54%

37%

—

40%

Adjusted EBITDA (in millions)

$41

—

$43

$218

—

$223

Year-over-year increase

23%

—

29%

23%

—

25%

Definition of Key Metrics

Average WSEEs - Determined by calculating the company’s
cumulative worksite employees paid during the period divided by the
number of months in the period.

Adjusted EPS- Represents diluted net income per share
computed in accordance with GAAP, excluding the impact of non-cash
stock-based compensation and costs associated with a one-time tax reform
bonus paid to corporate employees.

Insperity will be hosting a conference call today at 10 a.m. ET to
discuss these results, provide guidance for the second quarter and an
update to the full year guidance, and answer questions from investment
analysts. To listen in, call 877-651-0053 and use conference i.d. number
6688618. The call will also be webcast at http://ir.insperity.com.
The conference call script will be available at the same website later
today. A replay of the conference call will be available at
855-859-2056, conference i.d. 6688618. The webcast will be archived for
one year.

Insperity, a trusted advisor to America’s best businesses for more than
32 years, provides an array of human resources and business solutions
designed to help improve business performance. Insperity® Business
Performance Advisors offer the most comprehensive suite of products and
services available in the marketplace. Insperity delivers administrative
relief, better benefits, reduced liabilities and a systematic way to
improve productivity through its premier Workforce Optimization®
solution. Additional company offerings include Human Capital Management,
Payroll Services, Time and Attendance, Performance Management,
Organizational Planning, Recruiting Services, Employment Screening,
Expense Management Services, Retirement Services and Insurance Services.
Insperity business performance solutions support more than 100,000
businesses with over 2 million employees. With 2017 revenues of $3.3
billion, Insperity operates in 68 offices throughout the United States.
For more information, visit http://www.insperity.com.

The statements contained herein that are not historical facts are
forward-looking statements within the meaning of the federal securities
laws (Section 27A of the Securities Act of 1933 and Section 21E of the
Securities Exchange Act of 1934).You can identify such
forward-looking statements by the words “expects,” “intends,” “plans,”
“projects,” “believes,” “estimates,” “likely,” “possibly,” “probably,”
“goal,” “opportunity,” “objective,” “target,” “assume,” “outlook,”
“guidance,” “predicts,” “appears,” “indicator” and similar expressions.
Forward-looking statements involve a number of risks and uncertainties.
In the normal course of business, Insperity, Inc., in an effort to help
keep our stockholders and the public informed about our operations, may
from time to time issue such forward-looking statements, either orally
or in writing. Generally, these statements relate to business plans or
strategies, projected or anticipated benefits or other consequences of
such plans or strategies, or projections involving anticipated revenues,
earnings, unit growth, profit per worksite employee, pricing, operating
expenses or other aspects of operating results. We base the
forward-looking statements on our expectations, estimates and
projections at the time such statements are made. These statements are
not guarantees of future performance and involve risks and uncertainties
that we cannot predict.In addition, we have based many of these
forward-looking statements on assumptions about future events that may
prove to be inaccurate.Therefore, the actual results of the
future events described in such forward-looking statements could differ
materially from those stated in such forward-looking statements. Among
the factors that could cause actual results to differ materially are:
(i) adverse economic conditions; (ii) regulatory and tax developments
and possible adverse application of various federal, state and local
regulations; (iii) the ability to secure competitive replacement
contracts for health insurance and workers’ compensation insurance at
expiration of current contracts; (iv) cancellation of client contracts
on short notice, or the inability to renew client contracts or attract
new clients; (v) vulnerability to regional economic factors because of
our geographic market concentration; (vi) increases in health insurance
costs and workers’ compensation rates and underlying claims trends,
health care reform, financial solvency of workers’ compensation
carriers, other insurers or financial institutions, state unemployment
tax rates, liabilities for employee and client actions or
payroll-related claims; (vii) failure to manage growth of our operations
and the effectiveness of our sales and marketing efforts; (viii) the
impact of the competitive environment and other developments in the
human resources services industry, including the PEO industry, on our
growth and/or profitability; (ix) our liability for worksite employee
payroll, payroll taxes and benefits costs; (x) our liability for
disclosure of sensitive or private information; (xi) our ability to
integrate or realize expected returns on our acquisitions; (xii) failure
of our information technology systems; (xiii) an adverse final judgment
or settlement of claims against Insperity; and (xiv) disruptions to our
business resulting from the actions of certain stockholders. These
factors are discussed in further detail in Insperity’s filings with the
U.S. Securities and Exchange Commission. Any of these factors, or a
combination of such factors, could materially affect the results of our
operations and whether forward-looking statements we make ultimately
prove to be accurate.

Except to the extent otherwise required by federal securities law, we
do not undertake any obligation to update our forward-looking statements
to reflect events or circumstances after the date they are made or to
reflect the occurrence of unanticipated events.

Less distributed and undistributed earnings allocated to
participating securities

(585

)

(781

)

(25.1

)%

Net income allocated to common shares

$

49,406

$

34,847

41.8

%

Basic net income per share of common stock

$

1.20

$

0.85

41.2

%

Diluted net income per share of common stock

$

1.18

$

0.85

38.8

%

Insperity, Inc.

Summary Financial Information (continued)

(in thousands, except per share amounts and statistical data)

(Unaudited)

Three Months Ended

March 31,

2018

2017

Change

Statistical Data:

Average number of worksite employees paid per month

195,683

174,354

12.2

%

Revenues per worksite employee per month(1)

$

1,728

$

1,687

2.4

%

Gross profit per worksite employee per month

340

305

11.5

%

Operating expenses per worksite employee per month

230

202

13.9

%

Operating income per worksite employee per month

110

102

7.8

%

Net income per worksite employee per month

85

68

25.0

%

(1) Gross billings of $10,090 and $9,589 per worksite
employee per month, less payroll cost of $8,362 and $7,902 per worksite
employee per month, respectively.

Insperity, Inc.

Summary Financial Information (continued)

(in thousands, except per share amounts and statistical data)

(Unaudited)

GAAP to Non-GAAP Reconciliation Tables

Three Months Ended

March 31,

2018

2017

Change

Payroll cost (GAAP)

$

4,908,984

$

4,132,992

18.8

%

Less: Bonus payroll cost

830,861

615,258

35.0

%

Non-bonus payroll cost

$

4,078,123

$

3,517,734

15.9

%

Payroll cost per worksite employee per month (GAAP)

$

8,362

$

7,902

5.8

%

Less: Bonus payroll cost per worksite employee per month

1,415

1,177

20.2

%

Non-bonus payroll cost per worksite employee per month

$

6,947

$

6,725

3.3

%

Non-bonus payroll cost represents payroll cost excluding the impact of
bonus payrolls paid to the company’s worksite employees. Bonus payroll
cost varies from period to period, but has no direct impact to the
company’s ultimate workers’ compensation costs under the current
program. As a result, Insperity management refers to non-bonus payroll
cost in analyzing, reporting and forecasting the company’s workers’
compensation costs.

March 31,

2018

December 31,

2017

Cash, cash equivalents and marketable securities (GAAP)

$

356,569

$

356,220

Less: Amounts payable for withheld federal and state income taxes,
employment taxes and

other payroll deductions

254,202

271,547

Client prepayments

14,863

23,603

Adjusted cash, cash equivalents and marketable securities

$

87,504

$

61,070

Adjusted cash, cash equivalents and marketable securities excludes funds
associated with federal and state income tax withholdings, employment
taxes and other payroll deductions, as well as client prepayments.
Insperity management believes adjusted cash, cash equivalents and
marketable securities is a useful measure of the company’s available
funds.

Three Months Ended

March 31,

2018

2017

Change

Operating expenses (GAAP)

$

135,017

$

105,854

27.6

%

Less:

One-time tax reform bonus

9,306

—

—

Adjusted operating expenses

$

125,711

$

105,854

18.8

%

Operating expenses per worksite employee per month (GAAP)

$

230

$

202

13.9

%

Less:

One-time tax reform bonus per worksite employee per month

16

—

—

Adjusted operating expenses per worksite employee per month

$

214

$

202

5.9

%

Adjusted operating expenses represent operating expenses excluding the
impact of the one-time tax reform bonus. Insperity management believes
adjusted operating expenses is a useful measure of the company’s
operating costs, as it allows for additional analysis of the company’s
operating expenses separate from the impact of these items.

Three Months Ended

March 31,

2018

2017

Change

Net income (GAAP)

$

49,991

$

35,628

40.3

%

Income tax expense

15,098

17,706

(14.7

)%

Interest expense

1,070

623

71.7

%

Depreciation and amortization

5,213

4,254

22.5

%

EBITDA

71,372

58,211

22.6

%

Stock-based compensation

3,135

4,503

(30.4

)%

One-time tax reform bonus

9,306

—

—

Adjusted EBITDA

$

83,813

$

62,714

33.6

%

Net income per worksite employee per month (GAAP)

$

85

$

68

25.0

%

Income tax expense per worksite employee per month

26

34

(23.5

)%

Interest expense per worksite employee per month

2

1

100.0

%

Depreciation and amortization per worksite employee per month

9

8

12.5

%

EBITDA per worksite employee per month

122

111

9.9

%

Stock-based compensation per worksite employee per month

5

9

(44.4

)%

One-time tax reform bonus per worksite employee per month

16

—

—

Adjusted EBITDA per worksite employee per month

$

143

$

120

19.2

%

EBITDA represents net income computed in accordance with generally
accepted accounting principles (“GAAP”), plus interest expense, income
tax expense, depreciation and amortization expense. Adjusted EBITDA
represents EBITDA plus costs associated with a one-time tax reform bonus
paid to corporate employees and non-cash stock-based compensation.
Insperity management believes EBITDA and adjusted EBITDA are often
useful measures of the company’s operating performance, as they allow
for additional analysis of the company’s operating results separate from
the impact of these items and Adjusted EBITDA is used by our lenders to
assess our leverage and ability to make interest payments.

Three Months Ended

March 31,

2018

2017

Change

Net income (GAAP)

$

49,991

$

35,628

40.3

%

Non-GAAP adjustments:

Stock-based compensation

3,135

4,503

(30.4

)%

One-time tax reform bonus

9,306

—

—

Total non-GAAP adjustments

12,441

4,503

176.3

%

Tax effect

(2,886

)

(1,495

)

93.0

%

Adjusted net income

$

59,546

$

38,636

54.1

%

Three Months Ended

March 31,

2018

2017

Change

Diluted net income per share of common stock (GAAP)

$

1.18

$

0.85

38.8

%

Non-GAAP adjustments:

Stock-based compensation

0.07

0.11

(36.4

)%

One-time tax reform bonus

0.22

—

—

Total non-GAAP adjustments

0.29

0.11

163.6

%

Tax effect

(0.06

)

(0.04

)

50.0

%

Adjusted diluted net income per share of common stock

$

1.41

$

0.92

53.3

%

Adjusted net income and adjusted diluted net income per share of common
stock represent net income and diluted net income per share computed in
accordance with GAAP, excluding the impact of non-cash stock-based
compensation and costs associated with a one-time tax reform bonus paid
to corporate employees. Insperity management believes adjusted net
income and adjusted diluted net income per share of common stock are
useful measures of the company’s operating performance in this period,
as they allow for additional analysis of the company’s operating results
separate from the impact of these items.

Non-bonus payroll cost, adjusted cash, cash equivalents and marketable
securities, adjusted operating expenses, EBITDA, adjusted EBITDA,
adjusted net income and adjusted diluted net income per share of common
stock are not financial measures prepared in accordance with GAAP and
may be different from similar measures used by other companies.
Non-bonus payroll cost, adjusted cash, cash equivalents and marketable
securities, adjusted operating expenses, EBITDA, adjusted EBITDA,
adjusted net income and adjusted diluted net income per share of common
stock should not be considered as a substitute for, or superior to,
measures of financial performance prepared in accordance with GAAP.
Investors are encouraged to review the reconciliation of the non-GAAP
financial measures used in this press release to their most directly
comparable GAAP financial measures as provided in the tables above.

The following is a reconciliation of GAAP to non-GAAP financial measures
for second quarter and full year 2018 guidance (in millions, except per
share amounts):

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